© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
- Output tax charged where input tax would be blocked
[37] Article 5(3)(b) is phrased in a roundabout way, but what it means is that:
(1) if the motor car is used in such a way that
(2) had it been so used when it was originally supplied to the taxable person
(3) the input tax would have been disallowed, then
(4) the motor car will be treated as supplied by the taxable person for the purposes of the business. In other words, output tax will be charged on a self-supply.
[38] The question whether the use of the motor car post-conversion is such that input tax would have been disallowed had it been used in that way when initially supplied depends on whether Article 7 applies.
[39] Article 7, set out above, blocks the input tax on the supply of a motor car to a taxable person unless the motor car is a "qualifying motor car". That is, if the car is a qualifying car, the input tax is not blocked and there is no self-supply and no charge to output tax." (Three Shires Trailers Limited v. HMRC [2024] UKFTT 79 (TC), Judge McKeever)